As a result of higher inventory costs and decreased capacity utilisation, Page Industries Ltd.’s shares fell 15% on Friday to a low of 34,968.60 on the BSE. The business also announced a 58.87% decline in net profit to 78.35 crore for the fourth quarter that ended on March 31.
Its operational revenue decreased 12.78% to 969.09 crore (1,111.11 crore).The stock partially rebounded, though, and closed at 37,456.25, down 9% from the previous day’s finish of 41,139.50.
The brand licensee of Jockey underwear’s net profit increased 6.46 percent to 571.24 crore ($536.53 crore) for the fiscal year that ended in March 2023, and operating revenue increased by 23.21 percent to 4,788.63 crore.
“Temprory impact”
The managing director of the business VS Ganesh claimed that the year had been difficult and that consumption had generally declined. He has a bullish outlook on demand and believes that this effect is just temporary. Analysts, however, are unimpressed with the results and anticipate difficult times.
The Q4 PAT was 40% below forecast, driven by an all-around miss, according to Emkay Global Financial, which advised ‘Sell’ on the company with a target price of 35,000.
With the realisation of low-cost inventories and an emphasis on cost savings (other than marketing), Page Industries anticipates margin to continue its comeback. However, “we think revenue recovery is crucial for retracing margin to the desired 19-21% band (vs. 15% in H2FY23).”
“We like the management’s unwavering commitment,” said Axis Securities. Despite short-term volume pressure, the retailer is placing a major emphasis on the growth of distribution across channels and into smaller areas. In the long run, it will make Page stronger and more nimble than the opposition. However, short-term obstacles like the introduction of ARS and a muted market environment will stall the volume growth and profit trend.
“We believe Page Industries is deriving robust operating leverage from the strong recall of its brand, Jockey,” Elara Securities stated. We anticipate that gains from a better business model will more than offset any short-term strain brought on by the adoption of ARS.
Over the past six months, the stock price has been under pressure and has dropped by more than 20%. “Due to rich valuations (58x FY25E) and moderate growth outlook (owing to increased competitive intensity), we believe the stock price does not offer upside,” said ICICI Securities.
